National underwriter Stewart Title Guaranty Co. went after the co-conspirator of one of its agents, seeking the money the conspirator received from the agent’s escrow account. The magistrate judge assigned to the case was asked to make a recommendation as to Stewart’s motion for default judgment as to the co-conspirator.
The case is Stewart Title Guaranty Co. v. Revolutionary Marketing Inc., et al., (U.S> District Court for the District of Maryland, No ELH-11-0620).
On March 8, 2011, Stewart field suit against its agent, Sanford Title Services LLC, and its co-conspirators, Revolutionary Marketing Inc. its owner, Niesha Williams, AJ & A Investment Group Nevada LLC, Rhonda Scott, Senyo Bulla, and Selective Insurance Co. of America, for claims arising out of an alleged conspiracy to conduct a fraudulent real estate closing scheme.
Stewart alleged that during Sanford’s tenure as its agent, the defendants conspired to use Sanford Title for their own improper purposes because of its access to settlement funds. It alleged that despite receiving escrow funds for recordation of instruments, Sanford Title did not record deeds of trust for more than 50 closings. The insurer has recorded and is continuing to record those instruments, and has incurred more than $250,000 in costs in doing so. Stewart also alleged that existing mortgages and liens were not paid off in at least eight transactions. In addition, Stewart contended that despite regularly receiving money in escrow insurance premiums, Sanford Title seldom remitted premiums to Stewart for transactions that were to be insured by the underwriter. Instead, it used the funds to make improper disbursements to the defendants. It asserted that Revolutionary marketing received the sum of $459,597.31 in improper disbursements from Sanford Title’s escrow account.
Stewart also claimed that the defendants’ malfeasance caused a shortfall in Sanford Title’s escrow account between $2 million and $4 million. The insurer incurred costs to resolve or correct many of the acts or omissions arising out of closings conducted by Sanford Title, including costs to: record land instruments, pay property taxes, pay unreleased liens and resolve title insurance claims. Accordingly, in its amended complaint, Stewart is seeking: interest, attorney’s fees and costs; a court order establishing a constructive trust for its benefit for any assets or properties that could be traced to improper closings conducted by Sanford Title.; a court order granting Stewart an equitable lien on improperly received assets or properties received from closings conducted by Sanford Title; and a court order granting Stewart a writ of restitution for the improper disbursements made to the defendants.
On Feb. 7, 2012, Stewart filed a motion for default judgment against Revolutionary Marketing. The motion was assigned to the magistrate judge to review and make recommendations concerning damages.
The magistrate judge recommended the motion be granted, finding that Stewart had properly pled a claim for civil conspiracy against Revolutionary Marketing as well as proper support for the damages claimed.